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EI premiums to rise in 2011

Improved economy justifies end to freeze: Flaherty

09/13/2010|hrreporter.com|Last Updated: 09/22/2010

Now that the economy and job situation have improved in Canada, a freeze on employment insurance (EI) premiums that has been in effect for two years will end, according to Finance Minister Jim Flaherty.

"The situation with EI would remit to the normal situation and the freeze would end," said Flaherty, talking about the Jan. 1, 2011 deadline, according to the CBC.

Announced as part of the Economic Action Plan in the 2009 budget to combat the effects of the recession, the EI premium rate remained at $1.73 per $100 of insurable earnings for 2008, 2009 and 2010 to “achieve a projected combined economic stimulus of $4.5 billion.”

A new panel created by the federal government will move to raise EI premiums by the maximum allowed, according to the Globe and Mail. The independent body will recommend they be raised by 15 cents on every $100 earned, an 8.7-per-cent increase from the current $1.73 and the maximum allowed under federal law. Employers will have to pay an extra 21 cents per $100.

And this past weekend, another EI program that granted an additional five weeks of benefits to all workers (and up to 20 additional weeks for longer-serving workers) also ended.

But Ontario Premier Dalton McGuinty criticized the timing of the changes.

"It's too early for us to roll back benefits for employment insurance, given the state of the recovery," said McGuinty, according to media reports. "I think that's a mistake."

"Given this tremendous and unusual uncertainty, I think we're in a period of prolonged, very slow growth, and that calls for us to maintain that kind of measure to ensure that those people who are having difficulty finding a job have the necessary supports."

A high national unemployment rate, inconsistent job growth and a jump in workers actively looking for jobs should give Prime Minister Stephen Harper enough reason to extend special EI stimulus measures, said Ken Lewenza, president of Canadian Auto Workers.

"The Harper government is looking for any justification to shut down much-needed government stimulus, including EI enhancements for workers, when all signs suggest it's premature to do so," he said.

While monthly job market figures by Statistics Canada said there was a jump in jobs by over 35,000 in August, the bulk of job creation was in the educational services sector, a seasonal trend “and hardly a cause for celebration" said Lewenza.